The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

EL SEGUNDO, CA - AUGUST 10: Dwight Howard (L) is introduced to the media as the newest member of the Los Angeles Lakers by General Manager Mitch Kupchak during a news conference at the Toyota Sports Center on August 10, 2012 in El Segundo, California. The Lakers aquired Howard from Orlando Magic in a four-team trade. In addition, Lakers wil receive Chris Duhon and Earl Clark from the Magic. (Image credit: Getty Images via @daylife)

Earlier this week, word began to spread that basketball fans may be in for another summer of incessant speculation regarding the future of L.A. Lakers' free agent center Dwight Howard, with rumors emerging that rather than resign with the Lakers as expected, Howard may well flee to another team, with the leading candidates cited as the Houston Rockets and Dallas Mavericks.

The past three years have been nothing short of a circus for Howard – the 26-year old who is generally considered one of the top 5 players in the game when healthy (and motivated) – and his history of immaturity and indecisiveness have been well chronicled.

As a member of the Orlando Magic, Howard grew increasingly frustrated with what he perceived to be an average supporting cast in a league that requires teams to have multiple stars to succeed, despite an NBA Finals appearance in 2009. Shortly after the lockout ended in November 2011, Howard demanded a trade to the L.A. Lakers, Brooklyn Nets, or Dallas Mavericks. What followed was a four-month period of constant waffling by the Magic big man, with media outlets consistently reporting Howard’s dissatisfaction with his current team, only to be met by constant denials by Howard.

Those trades never panned out, and mere months away from being able to opt-out of his deal with the Magic and reach free agency, Howard inexplicably opted to extend his contract by one year. A few weeks later, Howard’s tenure in Orlando reached its nadir when then-coach Stan Van Gundy stated at a press conference that Howard wanted him fired, only to have Howard, who was unaware of his coach’s comments, approach the podium and give his coach a hug, giving the world this awesomely awkward video:

In August, Howard’s time with Orlando thankfully came to an end, with the Magic dealing him to the L.A. Lakers. And although Howard’s deal carried over to his new team – meaning he was still scheduled to become a free agent after the 2012-2013 season -- it was thought that the trade would finally put an end to the speculation surrounding Howard’s future, because as the premier franchise in basketball (sorry, Celtics fans), the Lakers simply do not lose free agents they aim to keep.

Then came the news that Howard has privately indicated that re-signing in L.A. is not a done deal; rather, the free-agent center will give strong consideration to the Houston Rockets and Dallas Mavericks.

While many expected Howard’s re-upping with the Lakers to be a slam dunk given the appeal of the Lakers’ 16 championship banners and its legacy of legendary big men from Chamberlain to Kareem to Shaq to Bynum (just kidding on the last one), the primary reason Howard to the Lakers was accepted as a foregone conclusion was, quite simply, money.

Based on the NBA’s collective bargaining agreement, Howard can earn significantly more if he signs with the Lakers than if he departs to another team. This is because Howard has played at least three consecutive years under the same contract – albeit not for the same team – and thus has earned his “Larry Bird” rights. As a result, the Lakers can resign Howard for 5-years with a maximum annual increase in pay of 7.5%, while another team would be limited to offering a 4-year deal with maximum annual raises of only 4.5%.

Upon reviewing Howard’s 2012 contract, the size of the NBA salary cap, and the effects of those two items on Howard's maximum salary at the start of his next deal, the difference between the two deals looks quite material:

Potential Lakers deal: 5 years, $118 million.

Should Howard sign with a new team or be signed by the Lakers and immediately traded: 4 years, $87.6 million.

So by fleeing the Lakers, Howard would leave $30 million on the table. Would he do it?

Ignoring the money for a moment, it certainly would appear that Howard might find a better basketball situation in say, Houston, that in L.A. Lakers’ icon and Howard running mate Kobe Bryant is recovering from a ruptured Achilles tendon, and at 35-years old, may never be the same player he once was. And call this conjecture, but I never got the idea Howard was thrilled playing alongside the domineering personality of the Black Mamba in the first place. The rest of the roster is largely devoid of elite talent, save for forward Pau Gasol, and because Gasol is set to earn $19 million in 2014, he may well have to be jettisoned if the Lakers want to surround Howard with an improved, younger core.

And let’s not forget, just last week it was reported that Howard expressed frustration with Lakers coach Mike D’Antoni to Lakers’ G.M Mitch Kupchak. D’Antoni, Howard claimed, failed to solicit his opinion on basketball issues, opting instead to confer with older veterans like Bryant and Steve Nash. Does that sound like a guy who's enamored with his current situation to you?

Meanwhile, the Houston Rockets are rife with young talent; a superstar guard in James Harden, a perimeter scorer in Chandler Parsons, and developing players in Thomas Robinson and Jeremy Lin. Having to settle for a four-year deal with Houston, rather than the five year deal the Lakers could offer, likely wouldn’t be an impediment to Howard because at 27-years old, a four-year contract would put Howard back on the free agent market at 31 primed for one more mega-deal. A five year contract, to the contrary, could allow teams to witness one more years of aging or injury, jeopardizing Howard’s final big payday.

Of course, there’s still that matter of the $30 million. But as you know if you read this blog, your earnings aren’t all about your gross salary: Uncle Sam and the states get their cut as well. And if money is really the only thing luring Howard back to L.A., the lack of an income tax in Texas may level the playing field enough to convince Howard to head to Houston.

As you may have learned from Phil Mickelson, California currently offers the most oppressive state tax regime in the country, with a maximum rate of 13.3%. Texas, to the contrary, has no state income tax, meaning the $30 million difference in potential earnings suddenly becomes a bit smaller.